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The judgment deals with the dispute over the levy of interest u/s 220(2) of the Income-tax Act, 1961, for delay in payment of demand in the context of a block assessment. Summary: The appeal by the Revenue challenges the order of the Commissioner of Income-tax (Appeals) regarding the levy of interest under section 220(2) for delay in payment of demand in a block assessment case. The assessee had filed an application before the Settlement Commission, which was admitted, leading to a final order reducing the undisclosed income. The Assessing Officer charged interest from the date of assessment to the date of the Settlement Commission's order, which the assessee disputed. The Commissioner of Income-tax (Appeals) ruled in favor of the assessee, directing the withdrawal of the interest levy. The Revenue appealed this decision. The Tribunal rejected the technical objection raised by the Revenue regarding the maintainability of the appeal, emphasizing that the appeal challenges the very chargeability of interest under section 220(2). The Tribunal then delved into the legal provisions governing the charge of interest under section 220(2) and the Settlement Commission's jurisdiction under Chapter XIX-A of the Income-tax Act. It clarified that the Assessing Officer can levy interest under section 220(2) until the date of admission of the application by the Settlement Commission. The Tribunal referenced the Supreme Court's ruling in the Damani Brothers case to support this interpretation. The Tribunal concluded that interest under section 220(2) is legally leviable from the default date until the admission of the application by the Settlement Commission. It held that the interest should be revised if the demand is reduced as per the provisions. The Tribunal partially allowed the Revenue's appeal, rejecting the assessee's claim that no interest could be charged and also dismissing the Revenue's argument for interest up to the final order of the Settlement Commission. The Tribunal distinguished the judgment of the High Court of Delhi in a different case, emphasizing that it does not apply to the specific issue in this appeal, which was decided based on the Damani Brothers case. Ultimately, the appeal of the Revenue was partly allowed. The judgment was delivered by the Appellate Tribunal ITAT Mumbai, with the order pronounced on March 26, 2009.
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